FTSE 100 rises to 10,759.87 points as oil falls 6%
Key Facts
The FTSE 100 closed at 10,759.87 points on November 2, up from 10,729.78 points on October 30, according to EL7 data, while oil fell as hopes revived for limiting supply disruptions in the Middle East. Reuters said crude fell about 6% after talks between Iranian and Qatari officials on ending the US-Israeli war on Iran raised hopes of reducing supply disruptions. The British index rose 0.3% during the session, according to Investing.com. That followed three consecutive sessions of gains between October 28 and 30, followed by another rise on November 2 despite a decline in the index on October 29. The move puts Monday’s close within a volatile path, rather than a four-day unbroken run of daily gains as stated in the initial version.
January Brent futures fell 4.4% to $108.38 a barrel, while December West Texas Intermediate futures dropped 4.5% to $99.39, according to Investing.com. Monday’s decline came after Brent ended October at its highest level in six months, amid concerns that the conflict could escalate after the US midterm elections, according to Reuters as reported by Pakistan Today. Tim Waterer, chief market analyst at KCM Trade, attributed the decline to a technical correction after the previous week’s gains, alongside expectations that diplomatic progress could be made and that no major military escalation would occur over the weekend. He said the market remained alert to the possibility of tougher rhetoric on Iran after the US elections, which could push Brent toward $120 a barrel. These risks leave open the possibility of the risk premium returning to oil prices, even after its decline in the session.
Iranian Foreign Minister Abbas Araghchi said on Sunday that negotiations were continuing through Qatari mediation, aimed at keeping consultations under way in pursuit of a resolution to the conflict. Tehran was ready for military defense and diplomatic engagement, he added, according to Reuters. The Reuters report said the course of the talks had strengthened hopes of reducing disruptions to Middle Eastern supplies, which was reflected in crude prices. But the decline did not eliminate risks to shipping and infrastructure in the region, or the possibility of renewed escalation. The previous week’s oil gains had preceded the technical correction cited by Waterer. The effect of any diplomatic progress on supplies remains tied to the course of the talks and security developments, according to the sources.
In Britain, a Bank of England survey of company directors showed that expectations for consumer price inflation over the coming year rose to 3.3% in the three months to October, from 3.1% in the three months to September. Inflation expectations for three years remained at 2.8% in the three months to October. On wages, companies continued to expect growth of 3.4% over the coming year, while reported annual wage growth eased to 3.9%, down 0.1 percentage points from the previous period. The figures come ahead of the Bank of England meeting, after the bank held its interest rate at 3.75% in September by a 6-to-3 vote. Three members voted for an increase of 0.25 percentage points to 4%; that was a previous vote and does not determine the outcome of the November meeting.
The Bank of England is due to announce its next decision on Thursday, November 5, alongside the publication of the Monetary Policy Committee meeting summary and minutes and the Monetary Policy Report. The bank has also set December 4 as the date for the next release of Decision Maker Panel survey data. In the stock market, BP shares fell 1.2% and Shell shares dropped 0.76% as Brent declined, while Endeavour Mining and Vodafone shares weighed on the index, according to Investing.com. Germany’s DAX rose 0.6%, and France’s CAC 40 advanced 1% in the same session. The British index’s gain thus coincided with losses in energy shares, while oil moves and the Bank of England meeting remained among the week’s key events.